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Financing activities in cash flow statement12/30/2023 ![]() ![]() If the dividend for this year is only proposed, but not paid, it should be excluded from the statement of cash flows.ĭividend payments in the year will normally be contained in the Statement of Changes in Equity. This might include the final dividend from the previous financial period, and an interim dividend issued during the period, if any. Make sure you only include dividends actually paid during the year in the statement of cash flows. Some entities prefer to disclose dividends as part of operating activities, to show users of the financial statements that it can make these dividend payments from operating cash flows. Shareholders who buy shares in the entity may expect dividends in the same way a bank will expect interest on a loan. Dividends paidĭividends paid are normally treated as financing activity, because they are a cost of obtaining financial resources, in the form of equity investment. This is true if the loan is not used as an integral part of the cash management function of the business. If you look at what the loans relating to the interest are for, it could be more appropriate to classify it as a financing activity. ![]() Interest paid is normally considered a cash flow from operating activities.
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